MGT505 IB Assignment1

Title: Obstacles for KPB in Vietnam market

Abstract
KPB Marketing Company Limited was established in March 2013 as a trading company for
export and import company began to import cooking oil from Germany and has been a
distributor. Sole selling "VITO" oil filtration system brings innovation from SYS
Systemfiltration. Licensed initiative of Germany in five countries in Southeast Asia.
Thailand, Cambodia, Laos, Myanmar and Vietnam
As of the middle of 2013, the company began selling the system to filter cooking oil in the oil
filter and still get high quality in Thailand.
A year ago, the company expanded into the Vietnamese market, although the company has
been successful due to the sale of customer satisfaction and sales growth in the United States.
But in Vietnam, the company was unable to meet sales goals despite spending a lot of it spent
twice as much on the market. To penetrate the Vietnamese market, the company exports both
directly and indirectly. VITO products currently available on several different channels such
as direct sales agents, manufacturers, distributors and licensed online.
Vietnam is a large market with high economic growth and competition in the market is low.
This is a big opportunity for Vietnamese companies, but customers do not know much about
the bad effects of using cooking oil that is not clean. Moreover, even with Vietnamese law
that declared penalty for all food vendors with oil fries are polluted with chemicals Polar
greater than 25%, but the government and police never forced or punish anyone who does not
follow. this law These are the main obstacles for the company to break into the Vietnamese
market.
In order to increase sales of products VITO in Vietnam, KPB international marketing should
begin with the market knowledge and raise awareness of the seriousness of the consequences
of bad cooking oil recycled just like that. agreed to build brand awareness and to benefit from
concerned customers VITO view, the company should try to support or even working with
government agencies to monitor the restaurant does. law-abiding

1. Introduction
1.1 Company Description
KPB Marketing International was founded in March 2013 as a trading company for export
and import company began to import cooking oil from Germany and has been a distributor.
Sole selling "VITO" oil filtration system brings innovation from SYS Systemfiltration.
Licensed initiative of Germany in five countries in Southeast Asia. Thailand, Cambodia,
Laos, Myanmar and Vietnam
As of the middle of 2013, the company began selling the system to filter cooking oil in the oil
filter and still get high quality in Thailand.
In 2014, the Company has drilled to market a small restaurant and other provinces in the
country, the products are available nationwide. Most of its revenues come from the luxury of
upscale restaurants, hotels, airlines, restaurants, small shops and restaurants, respectively.
A year ago, the company expanded into the Vietnamese market, although the company has
been successful due to the sale of customer satisfaction and sales growth in the United States.
But in Vietnam, the company was unable to meet sales goals despite spending a lot of it spent
twice as much on the market.
1.2 Product Description
VITO is developing innovative filter cooking oil, which is recommended by the hotel and
world-class restaurants, several international chains such as Hilton, Intercontinental Hotel,
Hotel Grand Hyatt, Marriott Hotel, Burger King and many others.
VITO is an innovative technology that has been highly acclaimed all over the world.
VITO is a leading innovation that allows oil in the best condition and reduce fuel
consumption by removing harmful carbon particles, suspended sediments and polar
compounds. This will increase the lifespan of oil by 50%, which means that customers
receive all of the benefits below.
Lower consumption of cooking oil
Oil often Less
Increase taste and smell of frying your food.
Super oil clean up quickly.
Easy to clean oil Very
Save work with automatic cleaning oil.
Demand for small stocks due to smaller orders of oil.

2. Literature Review about Strategies for Analyzing and Entering Foreign Markets
Access to foreign markets is a way for companies to expand their business as Murmur
(1996), expansion into international markets is a great way for companies to grow and Yip
Hult (2012) by stating that a number. much of the evidence that proves that the company's
global strategy and the need to internationalize themselves competitive and financial benefits
from it. This means that companies can choose to integrate into the international market as a
way to both grow and achieve greater success.
The company has applied for the expansion and entry into international markets drove up the
financial benefits and the competition that the company will gain from expanding to overseas
markets (Luo and Tung, 2007) in order. (Check Dunning R 2013) that.
The state has a lot of external and internal factors to consider. The biggest problem of the
external factor is competition. Competition is something to consider when you are looking
for a potential new market for your product or service. (Craig and Douglas, 2005), and often
the level of competition in the market that can make it easier or harder for you to enter and be
successful. You may find that the market is already saturated with products or services, such
as where you can market or give you a chance to come up with creative new ideas to market.
Or you may find that the demand for the product or service that is not currently in the market.
Regardless of the cause, the competition you're up against will help you move forward either
to the market or markets are different.
Business economist Michael Porter identified the following five forces of competition which
can be used to analyze the industry or market and competitive strategy: the threat of new
entrants or hinder him. The intensity of competition among existing competitors in the
market as a threat. The products represent the bargaining power of buyers and bargaining
power of suppliers (Porter, 1998), the other outside forces may be cultural differences that
may arise between the host country and its problems. Political, legal and country specific risk
(Johnson and Tellis 2008), which means you must have a comprehensive understanding of
the market you're going to deal with. One of the best ways to monitor the implementation of
all external forces, political, economic, social, technological, legal and environmental
analyzes rough.
It is important to mention that it is not only external threats. But that can create difficulties
for the company in the business' international context, the Company may face internal
problems, as they are evaluating the possibility of international markets they want to enter
(Alon.,. Before they enter the international market, the results can be devastating (Johnson
and Tellis 2008), the Company has considered carefully the resources that are most important
to the success of the company in selected markets (. Hafeez faded and Malak, 2002).
The choice of input modes are also key characteristics of successful who want to work in
international markets successfully, select the appropriate mode of entry of resources within
the competence of them and still do. there are external factors Prior to entering into the
transaction (Koch, 2001), there are many different forms of company to choose between them
when entering foreign markets. All the modes can be divided into three different groups.
Mode, the output of contract and the mode of acquisition (Root, 1998), the Company
strategically different resources and assets to work with your choice of input modes can be
very different from the company. complex is to select the input mode that is appropriate for
the right company, considering the resources of the company and its assets, the company

should strive to select the appropriate mode in order to get the maximum out of their talent
and. the List as successful as possible (Root, 1998).
3. Problem Statement
Look at sales in the past year (4.3 information: Details of the sale in 2015), it is clear
that the sales of products in the Vietnamese market VITO is terrible though Vietnam is a
potential market and large. (According to the analysis in 5.1: Market size of the oil filter in
Vietnam), but it can earn a little for the company, so it is clear that international markets are
facing problems to hacking KPB Vietnamese market.
Interview with the sales team and authorized distributors in Vietnam, said that more than 90
percent of customers are satisfied with their ability to inhibit, which will help increase the
lifespan of oil by up to 50% of them do not. buy "it's more than necessary." after in-depth
interviews with some customers, it found that most of them feel. "It's more than necessary"
because of three main reasons.
1. Do not know the danger of used cooking oil and old legislation on toxic than using
cooking oil (4.4 data: rules used cooking oil), so they could not see the need. to use
cooking oil clean. This means that they can not see the need to use VITO.
2. Know the dangers of using cooking oil fuel. I do not know about the law on toxic
than the oil in cooking. So they could not see the need for clean cooking fuel. This
means that they can not see the need to use VITO.
3. Know the dangers of cooking oil and the oil law on toxic than using cooking oil.
But do not follow the law because they had not experienced all the government
agencies to test their cooking oil and see who was punished by. State agencies or
arrested for using cooking oil that is not good. Therefore, they feel no need to do so
by law. This means that they can not see the need to use VITO.

To conclude this statement KPB international marketing problems facing these issues.
1. Customers in Vietnam and have not been educated about the impact that bad and do not
know the laws and regulations on toxic than using cooking oil.
2. State agencies do not enforce the law on toxic than the oil in cooking.

4. Data
Data 4.1: Statements of Comprehensive Income 2013, 2014 and estimated 2015
Items
31-Dec-13
$ 9,402.85
9,402.85

Total revenue*
Cost of sales
Gross profit

Fiscal Year
31-Dec-14
$ 1,041,753.87
581,636.60
460,117.27

31-Dec-15
$ 1,147,446.93
665,519.22
481,927.71

Total Operating expenses

334,411.76
343,660.36
402,409.64
EBIT
-325,008.91
116,456.91
79,518.07
-325,008.91
EBT
79,164.91
65,060.24
Net income (loss)
$ -325,008.91
$ 79,164.91
$ 65,060.24
Companys total revenue comprises of 95% Vito product, and 5% other products.
Data 4.2: Mark up (Percentages of sales) 2013, 2014 and estimated 2015
Items

Fiscal Year
31-Dec-13
31-Dec-14
31-Dec-15
Total revenue*
100%
100%
100%
Cost of sales
56%
58%
Gross profit
100%
44%
42%
Total Operating expenses
-356%
33%
35%
EBIT
-256%
11%
7%
EBT
-256%
7%
5%
Net income (loss)
-256%
7%
5%
Companys total revenue comprises of 95% Vito product, and 5% products.

Data 4.3: Sale Breakdown 2015

Country

Fiscal Year
31-Dec-15

Thailand
$ 1,103,843.95
Vietnam
43,602.98
Total revenue*
$ 1,147,446.93
Companys total revenue comprises of 95% Vito product, and 5% other products.

Data 4.4: Regulation of Used Cooking Oil in 2012

Vietnam's Ministry of Public Health has been published in announcing the penalties
for those who produce food with oil to fry with polar compounds with more than 25%, which
is the maximum allowed. Sellers who have been found guilty of more than just a cooking oil
that has been subject to a fine of up to 5.5 million Vietnamese dong (about 247 UDS).

5. Analysis
5.1 Market size of oil filtration system in Vietnam
Since oil filtration system is a new product in Vietnam, I can not specify the size of
the market precisely. To estimate the size of the potential market of oil filters in Vietnam, I
think about the total number of restaurants, multiplied by the price of their products from the
market research survey in 2013 found that the number of stores. Food in Vietnam has
decreased slightly compared to last year, with 139,144 restaurants and eateries, including
(online, 2015), however, the growth rate of the market will continue to increase significantly
to approximately 1000 households in. amounting to 77 384 139 144 61 760 stalls and
restaurants also 21,556,139,144 in Hanoi, the rest will be decided in other cities in 2013
estimated the size of the potential market for oil is estimated at US $ 34.3 million.
5.2 PESTLE analysis
PESTLE Analysis is a framework used to analyze macro-environmental factors that
may affect the project or business (Berry, 2015) PESTLE analysis can show the following.
Political factor
Vietnam is known to be controlled by a single party socialist republic. But their policy
is known as Doi Moi to create impressive changes to Vietnam's market economy-oriented.
This policy provides incentives to attract capital inflows, such as reducing tariffs to surrender
foreign currency and reduce barriers to restrict imports (Beresford 2008) in Vietnam
continued to achieve stability. In addition, Vietnam's political efforts to find a comprehensive
approach to improve the market economy and integration into the international use of the
country (DiGregorio, 2015).
But the face of the Communist monopoly on power remains firmly in place, Vietnam is likely
to have the government control over freedom for foreign companies that aim to enter the
domestic market.
KPB international markets should take cognizance of the fact that there are many restrictions
on the business activities of political activity and free speech. To reduce the risk of political
factors' KPB international marketing partners should be limited to domestic banks and reduce
fixed investment.
Economic factors
In economic terms, Vietnam is a rapidly rising economic power. For the last ten years,
Vietnam has very high GDP growth, just behind China and India (Vierra 2015), while per
capita income rose from $ 389 in 2006 to $ 1,685 in 2016 (US. Department of State, 2015)
However, the global recession has hurt Vietnam is a country with an export-oriented.
Vietnam's real GDP growth declining from 8.5 percent in 2007, less than 5 percent in 2003,
but rebounded to 7 percent in 2015 (Economist Intelligence Unit, 2015).
KPB for the international market, they must take into account economic factors such as
income, eliminating low compared to the country's weak currency and a weak banking
system. However, there are many opportunities to take advantage of economies of Vietnam,
because Vietnam is a market that is large and international trade very encouraging.

 Socio cultural factor

Vietnam has a population of 91.1 million baht (CIA World Factbook, 2015), with
25% under the age of 14 it is 28% of the urban population is 3.1 percentage changes between
2005-2015 (Data.worldbank.org 2016). Vietnam 's life expectancy is 72 years. Some of the
cultural influences on the teaching of traditional Confucian concept of family and the role of
the face (Elliott, 1999) influences are prevalent in rural areas. But will come under increasing
pressure from the influence of the West. There is an increasing demand for quality materials,
premium consumers better products and health products. Consumers are concerned about
food safety. (Report market opportunities in Vietnam: 2015).
Education is very important to Vietnamese. Although it is still a poor country with a per
capita income lower than Vietnam has recorded success relentless significantly in education
(Orkin 2015) literacy rate in Vietnam is high (92%. ). 8% of the illiterate, 80% of them live in
remote areas. (Data.worldbank.org, 2015)
It is important for the international market KPB to consider the social and culture of Vietnam.
As well as business contacts should be made through a local representative who can act as
interpreters or translators.
Technological factor
According to the Ministry of Information and Communication has 22.8 million
Internet users in Vietnam in 2014, representing 26.6% of the total population. The number of
Internet users in Vietnam has been ranked the seventh highest in the country with the use of
the Internet in Asia by Internet World Stats has increased interest in gadgets and consumer
products, technical (. Steinglass 2010). it is estimated that there are 50 million mobile phones
in actual.
Marketing, manufacturing, high technology in Vietnam is very large and very fast.
Technology is continuously changing dramatically in Vietnam may affect the ability of VITO
products if there is someone who can create innovative, more effective veto, it will have an
impact on brand reputation and financial performance.
In order to provide capacity KPB international market as an exclusive distributor of the VITO
Germany should check out the new products, especially those with a high capability in
innovation and communication with the parent company VITO about disasters. threats
continue to urge them for product development. They will be more competitive and to gather
customer feedback and delivered to VITO Germany in order to develop their products in the
future for the next KPB Marketing International is concerned about the issue of intellectual
property that can be. decrease Major violations VITO
Legal factor
The legal system of Vietnam is developing rapidly. The dynamics and transparency of
the legal system as a result has been improved significantly. Despite these significant
improvements Vietnamese law remains weak, resulting in the legal system inadequate and
unstable. In addition, the government did not enforce the law strictly.
Sellers who have been found guilty of more than just cooking oil that has been subject to
fines of up to 5.5 million Vietnamese dong (about 247 UDS), but state officials never forced
or punish those who do not follow this law.
Environmental factor
The geographical terrain of Vietnam poses its own set of unique considerations for
companies looking to enter the market. Transport links are poor and mountainous areas to
create a link between the north and south, there are challenges. Extreme weather conditions
also need to be considered carefully. Manufacturers abuse begin to feel the negative impact

of the embargo by suppliers and their customers, companies that pollute are also difficulties
in accessing bank funds into more banks are fine. their policies Refused to give loans to
customers in dark environments. These environmental problems have created many
opportunities for export to Vietnam.
5.3 Porters five forces analysis
Five Forces Analysis is a framework for analysis of the level of competition within
the industry developments and business strategy (Porter, 1985) Five Forces analysis are
shown below.
Rivalry among current competitors
"Customers today" filter is a parent company to control product consistency and
process industries that require large fries with a small number of competitors and the
competition between the competitors in the market Dominator filter oil remains low.
Bargaining power of suppliers
VITO imports from Germany. However, the terms and conditions of its contract with
the German company stated that KPB KPB international marketing authority for doing
business in the CLMV The bargaining power of suppliers in the middle.
Bargaining power of customers
Large customers can purchase oil in a large, tailor-made to save money. In addition,
retail customers today do not worry much about the importance of the product. At present,
the ability to negotiate a customer is quite high.
Threat of substitute products or services
Replacement products are available today with conventional oil filter with a white
cloth to separate the sediment filter and a scoop for the large. Those that are not effective and
have a poor quality oil operations V ITO is more comfortable, higher quality and better
outcomes. The threat of substitute products is low.
Threat of the new
VITO filtration products have innovative technologies. Inventions require high
financial investments. If a user can not create new markets, and are connected with these
technologies, we are faced with the difficulty of entering the market. Therefore, the threat of
new competitors is low.

5.4 SWOT analysis

Analysis SWOT turns SWOT matrix is planning structures that are used to evaluate
the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business
(Albert, 2005) SWOT analysis of the company can show. has the following
Strengths
VITO a product that is innovative, provides a wide range of oil filtrations systems.
VITO able to work under high temperature of 200 degrees Celsius and filter faster
than competing products.
Oil paper filter made from cellulose paper which is decomposable.
The machine is compact, lightweight, portable, easy to use and safe for use.
Weaknesses
Company current financial constraints.
Staffs are not sufficient to perform effectively in business.
Opportunities
Public awareness for healthy food consumption.
Threat
Business owners are looking at aspects of the business to consumer health and the
quality of their food.
Government subject to change laws and regulations over the use of cooking oil.
Lower price of cooking oil products from the overuse of palm in the world market.

5.5 Mode of Internationalization

To penetrate the Vietnamese market, the company exports both directly and indirectly
VITO products are currently available in different channels, which are expected to have
access to different types of customers throughout the region in sales.
Direct Sales
This is the main channel of KPB international market to sell to customers VITO larger.
Representatives production

The production is also known as an independent sales agent or a second channel of KPB
international market to sell to customers VITO larger.
Dealers
The company sold the rights of VITO and other products related to distribute to expand the
geographical area under the supervision of the market KPB international current KPB
international market with four distributors in Hanoi, Ho Chi Minh City, Can Tho. and Da
Nang
Online
KPB international online marketing websites that have been designed to provide access to
online customers as well as provide customers with the information they need and have a
positive influence in their decision making process.

6. Recommendations
According to analysis, the Vietnamese market is a large market with high economic
growth and competition in the market is low. This is a huge opportunity for the company.
Vietnamese customers, but do not know much about education and its impact on the worst of
cooking oil is not clean. Moreover, even with Vietnamese law that declared penalty for all
food vendors with oil fries are polluted with chemicals Polar greater than 25%, but the
government and police never forced or punish anyone who does not follow. this law These
are the main obstacles for the company to break into the Vietnamese market.
In order to increase sales of products VITO in Vietnam, KPB international marketing
should begin with the market knowledge and raise awareness of the seriousness of the
consequences of bad cooking oil recycled just like that. agreed to build brand awareness and
to benefit from concerned customers VITO view, the company should try to support or even
working with government agencies to monitor the restaurant does. law-abiding
To educate the market and assess customer perceptions KPB international marketing
can do it with these marketing activities.
Marketing Activities
Word about the harmful
effects of frying oil used,
new to the public.

VITO public media

Exhibition Marketing VITO

Objective
To raise awareness of the
serious consequences of
poorly recycled cooking oil
that we offer to the public to
drive sales VITO indirectly
from public attention.
To raise awareness of the
serious consequences of oil
recycled to the public that
we offer to drive sales VITO
indirectly from public
attention.
To build brand awareness
and benefits of concern to
consumers VITO food and

Target Group
Public health concerns and
those interested in social
issues.

Individuals, entrepreneurs
and mass food-related health
problems and quality of
edible products.

Consumer food operators

and public attending the
exhibition, the company

food- based entrepreneur

KPB Marketing
International also aims to
attract the attention of the
public to place their
concerns. the impact of bad
oil reuse.

aims to promote VITO in

the exhibition on technology
and innovation.